Daily Brief – EUR

EUR

In case you missed it, EUR has weakened by 5%+ since late August versus USD. The EUR has been beset by high fuel prices feeding through to a 3-year high inflation rate of 3.8%, the French debt crisis and a muscular USD which reached an 18-month high on Wednesday night. All the EUR strength in the first 6 months of 2026 has been reversed in the past 6 weeks. Current expectations are for an ECB rate hike in December.

EUR/USD 1.1202.

Reuters Poll

This comes under the heading of being careful what you wish for: a Reuters poll of 19 economists – collective nouns for economists include a dismal, a forecast and a variance – are calling for Chancellor Healey to stockpile a larger headroom cushion over expenditure. Clearly those same economists have short memories as his predecessor, Rachel Reeves had a go at doing that only to result in an accompanying drag on the UK economy before she expended it without any discernible benefit to UK growth.

GBP/USD 1.3264.

European Government 10 Year Borrowing Costs

Imagine falling asleep in 2012 and waking up in October 2026. Pinching yourself, you will be astonished to see that the Northern European countries that used to borrow most cheaply versus their Southern neighbours that used to pay the highest costs are now markedly changed. In 2015 the unkindly named PIIGS-Portugal, Italy, Ireland, Greece and Spain were the countries that paid most. Now Greece pays 4.35% versus Belgium at 4.29%. Portugal pays less than Spain; Ireland pays the same as the Netherlands and France pays more than Italy. France in fact also pays more than Greece, Belgium, Spain, Portugal, Finland, Austria, Ireland, Netherlands and of course Germany. The France-Germany 10 Year spread is 138bps.

GBP/EUR 1.1827.

UK Severe Drought

To be clear -at which the Environment Agency conspicuously fails, Severe Drought is defined as being the highest level of drought that can be declared. Likely to cause harm with urgent action required to protect people, water supplies, the environment, farming, infrastructure and other essential services, Severe Drought is fortunately rare in the UK. However, parts of Cornwall, Devon, Dorset, Somerset and both East and West Sussex have been designated as suffering from Severe Drought. What is unclear is that apart from restricting water usage is what concrete action can be taken to remedy the shortages. Fortunately help is on the way with wetter than average weather coming in from the Atlantic over the next 3 months driven by a strengthened Atlantic jet stream.

Brent Oil USD 104.63.

All Along The Watchtower

This day in 1968 Reprise Records issued Electric Ladyland by the Jimi Hendrix Experience. To describe it as a seminal album understates the significance of this the band’s most commercially successful release. Jimi Hendrix was subversive, had an afro hairstyle, slept with multiple attractive women of all races-often simultaneously and took industrial quantities of amphetamines. All of that ensured that Jimi Hendrix was insanely popular with what Janet Street Porter described as the youf of the time. This song is the best and most remembered track from the album.

“There must be some kind of way out of here”
Said the joker to the thief
“There’s too much confusion
I can’t get no relief”
Businessmen, they, they drink my wine
Plowmen dig my earth
None will level on the line
Nobody offered his word,” hey-hey
“No reason to get excited”
The thief, he kindly spoke
“There are many here among us
Who feel that life is but a joke, but, uh
But you and I, we’ve been through that
And this is not our fate
So let us stop talking falsely now
The hour’s getting late,” hey

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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